The privatisation programme last week confronted a
major setback when it was compelled to put long awaited and much over
due auction of Pakistan Telecommunication Company Limited (PTCL) on
The postponement came after Pakistan's government
marathon efforts to end a 10-day stand-off with 55,000 workers at
Pakistan's state-run telecom firm who were on strike against
privatisation planned for June 10, 2005.
Nine different trade unions of Pakistan
Telecommunication Company Limited (PTCL), the largest telecom company
in Pakistan, on May 26 told employees to stop work to resist
privatisation and press for several other demands.
Telecom Minister, Owais Leghari had to hurry to
hold talks with Prime Minister Shaukat Aziz in a bid to resolve the
situation. President of PTCL Employees Union Zia-ud-Din said 55,000
employees were on strike, while company officials said a skeleton
operation is running with 6,000 workers but customer services such as
inquiries and complaints were paralysed.
"We want the cancellation of privatisation
forthwith. The management had never taken us into confidence about the
sale of the company, a most profitable one," said Zia-ud-Din. The
unions were also pressing for confirmation of 4,800 daily-wage workers
and provision of job quotas for workers' children, he said.
"We are observing restraint till June 6 and
afterwards we will evolve a strategy if privatisation is not
stopped," Zia-ud-Din said.
Zia also said: "we are also concerned over the
potential price of the company, it should have been double what
government is demanding," he said. He said the government
intended to sell 26 percent of shares in PTCL at a price of 2.5
billion dollars, while it could fetch over five billion dollars.
Pakistan's Privatisation Commission on May 26
announced that the bidding for a 26 percent stake in PTCL will begin
on June 10 and that the deal would be completed by the end of next
The commission has already short-listed foreign
telecom conglomerates as potential buyers including Singapore Telecom
(SingTel), Emirates Telecommunications Corp (Etisalat), Telekom
Malaysia, MTC of Kuwait, Saudi Oger, Turkcell, China Mobile
Communication Corp and Saudi Telecommunications Company.
A statement of the government after the conclusion
of the worker-management dialogue said "the government has agreed
to delay the privatisation of the PTCL and the Privatisation
Commission will review the workers concerns and will decide in the
best interest of the nation, workers and PTCL."
The government said after the signing of the
agreement the workers had agreed to end their strike after government
had assurances that their interest would be safeguard after its
privatisation. It further said that the Cabinet Committee on
privatisation would take employees into confidence before finalising a
reference price for PTCL.
Since its (PTCL) launch in the early 1990,
Pakistan's bid to privatize state-owned enterprises has proceeded in
fits and starts. Despite privatization being a mantra for reducing the
budget deficit and improving efficiency, until 2003 the country had
only managed a couple of major deals — though successive government
had sold well over 100 state-owned units to private entrepreneurs in
the past decade.
The issue of global depository receipts for 9.8
percent of the state-owned telecom monopoly PTCL was the first
hallmark deal in 1992 that followed by the sale of another 2 percent
stake in the local market in 1994, raising about 900 million dollars.
Critics said that was the high time to sell the
company as it was being valued at around 12 billion dollars in view of
the global boom in the telecom sector.
A raft of negative factors had been hobbling the
commission at that time, however. The absence of a legal framework
defining privatization's limits, some questionable deals, frequent
changes of government and the confusion over policy all contributed to
A deteriorating law and order situation as well as
strong resistance from unions and politicians only made matter worse.
International Power, for instance, had to fight a
legal battle for over six years to establish the legitimacy of its
deal to buy into Kot Addu Power. Several leaders of the Commission
faced lawsuits and charges of taking kickbacks. Widespread pre-privatisation
layoffs at overstaffed organization cost former prime ministers Nawaz
Sharif and Benazir Bhutto much of their earlier popularity. But with
most of the spadework having been done by the government so these two
former premiers, President Pervez Musharraf was able to move things
along after he seized power.
In 2000, the government promulgated an ordinance
legitimizing the Privatisation Commission and defining its power to
assist the government in formulating and implementing its divestment
Now it would be quite a task for the privatisation
authorities to give a concrete date for PTCL privatisation due to
mounting pressure of union, who are determined to pursue their demand
unless they are met on ground.
According to some reports the commission officials
have vowed to bring the telecom giant under the hammer by June 30 as
they have successfully pursued the employees but it could be a wishful
thinking as workers are equally determined to not let go their core
With a long list of public sector organizations to
be privatized, it would be uphill challenge for the commission also to
sell Pakistan Steel, Pakistan International Airlines, and other local
giants, where unions have stronger presence and could cripple the
government plan. This is simply a setback.